The emergency prompted by the Coronavirus (COVID-19) has caused important changes to the alcoholic beverage industry governing the return of overstocked beverages purchased for canceled events and the cancellation of federal Alcohol and Tobacco Tax and Trade Bureau’s (“TTB”) in planned participation in industry conferences.
First of all, given the cancellation of many public events due to COVID-19, the federal government has loosened the prohibition of the sale of alcohol on return. The federal consignment sales rules generally prohibit the sale or purchase of alcohol beverage products with the privilege of return. Returns for ordinary and usual commercial reasons arising after the product has been sold are not prohibited, but the return or exchange of a product because it is overstocked or slow-moving does not constitute a return for ordinary and commercial reasons.
Local officials and event organizers have begun announcing cancellations of widely-attended events, such as parades, festivals, fairs, concerts, and sporting events based on concerns about COVID-19. These announcements may be made after wholesalers and retailers purchased large quantities of products to sell during those events.
Given the unexpected and widespread nature of the concerns involving COVID-19, TTB will not consider returns of alcohol beverage products purchased to sell during such cancelled events to violate federal consignment sales rules provided the products were not initially purchased or sold with the privilege of return. Even though such returns are lawful, a producer or wholesaler is not required to accept returns of such products.
In addition, because of COVID-19, TTB has canceled its planned participation in industry conferences over the next few months. TTB will update its Outreach Program Page once it can provide a status of events that will be held later in the year. TTB is considering other ways to deliver the educational materials it had planned to present at these events.